CHICAGO – June 14, 2017 – Luxury real estate buyers may find bargains in the U.S. compared to the rest of the world. The U.S. is hardly the most expensive when it comes to home prices in its luxury market.

Instead, China takes the world crown in that arena for the fastest-rising prices in luxury residential real estate around the world. Luxury home prices in Guangzhou, the capital of the southern province of Guangdong, rose a whopping 36.2 percent from March 2016 to March 2017, according to Knight Frank’s first-quarter Prime Global Cities Index, which ranks the top 5 percent of luxury real estate sales in 41 large international cities.

Meanwhile, the U.S.’s single-digit increases in that time period may seem more modest in comparison.

The top three global cities to land on the list are Guangzhou, up 36.2 percent; Beijing, where luxury home prices rose 22.9 percent; and Toronto, prices up 22.2 percent.

The U.S. cities landing on the Prime Global Cities Index include Miami (at number 14 on the list with a 4.1 percent year-over-year price increase), Los Angeles (prices up 2.5%), San Francisco (prices up 1.8%), and New York (prices up 1.7%).

“We’re seeing steady and sustainable luxury price growth in the key U.S. markets,” says Kate Everett-Allen, head of international residential research at Knight Frank. However, the cost of buying luxury homes isn’t rising quite as quickly in the U.S. as some other parts of the world because “there are a lot of major changes taking place both politically and internationally.”

NEW YORK – June 19, 2017 – Why did my doughnut cost 99 cents this morning instead of a simple, even dollar? It turns out that the price has less to do with cost or value and more to do with how our brains process numbers.

Our brains are good at some things but not others. We are terrible at crunching numbers, for example.

But we excel at quickly processing our environment – for instance, if we see a long object moving on the ground, we don’t calculate its trajectory and motion. Instead, we just run – better to take the risk of embarrassment (a twig on the ground) than risk being bitten by a snake.

To do this, our brains need to take in a relatively small amount of information and make up the rest using previous experience, expectations, and predictions.

Your brain is a cheater

The brain cheats, taking shortcuts and making snap judgments instead of carefully deliberating the facts. Most of the time, this is a good thing, because shortcuts are efficient and usually get you to the same place as the long way.

All business owners should consider experimenting with prices. Thanks to brain science, we now know that even a one-cent change can make a big difference.

Consider using a number that the human brain is likely to round down to make your product appear to be a better value. As a consumer, just becoming aware of your brain’s shortcuts can make you a more careful buyer.

Numbers are an easy place for the brain to take a shortcut. We tend to be great at making estimations but horrible at rounding. When our brains see a price tag with lots of numbers, they automatically estimate, so $4.99 ends up closer to $4 than $5; $66,999 becomes $66,000 or sometimes even $60,000. Psychologists have known this for decades, and economists now begrudgingly admit it as well.

Psychological factors

Businesses have used pricing tricks for years to their advantage. They figured out by experimentation that tiny differences in pricing can make big differences in sales, and researchers studied this effect in depth in the 1990s and early 2000s.

They found that there is often a big sales difference between $2.99 and $3, but dropping a product’s price from $2.24 to $2.23 does not yield a measurable increase in sales. A penny is not always worth a penny.

Of course, there are other psychological factors at work in pricing. Relative pricing plays an important role: A product’s price compared to the products physically surrounding it can impact its sales. That is why gas stations not only charge per gallon to the nine-tenths of a cent but also price match to the competitor across the street. The human brain is especially good at making either/or comparisons and especially bad at decimals.

How shoppers can prevail

This strategy applies to shoppers as well. If you’re buying a 99-cent doughnut, think $1. A penny probably won’t break your budget, but rounding bias becomes more important for a larger purchase.

A $399,000 house is pretty much $400,000, but not in your mind: your brain’s shortcut system will try to suggest it’s closer to $300,000.

When the stakes are that high, don’t just think about it. Remember, our brains are better at thinking than “we” are and will continue to trick us!

To combat this, physically write down the price on a piece of paper, strike through it, and re-write the appropriate number by rounding up. The best defense is always a strong offense.

WASHINGTON – March 13, 2017 – Riskier borrowers are making up a growing share of new mortgages, pushing up delinquencies modestly and raising concerns about an eventual spike in defaults that could slow or derail the housing recovery.

The trend is centered around home loans guaranteed by the Federal Housing Administration (FHA) that typically require downpayments of just 3 percent to 5 percent and are often snapped up by first-time buyers. The FHA-backed loans are increasingly being offered by non-bank lenders with more lenient credit standards than banks.

The landscape is nothing like it was in the mid-2000s when subprime mortgages were approved without verifying buyers’ income or assets, sparking a housing bubble and then a crash. Still, for some analysts, the latest development is at least faintly reminiscent of the run-up to that crisis.

“We have a situation where home prices are high relative to average hourly earnings and we’re pushing 5 percent-down mortgages, and that’s a bad idea,” says Hans Nordby, chief economist of real estate research firm CoStar.

The share of FHA mortgage payments that were 30 to 59 days past due averaged 2.19 percent in the fourth quarter, up from about 2.07 percent the previous quarter and 2.13 percent a year earlier, according to research firm CoreLogic and FHA. That’s still down from 3.77 percent in early 2009, but it represents a noticeable uptick.

While that could simply represent monthly volatility, “the risk is that the performance will continue to deteriorate, and then you get foreclosures that put downward pressure on home prices,” says Sam Khater, CoreLogic’s deputy chief economist. Such a scenario likely would take a few years to play out.

The early signs of some minor turbulence in the mortgage market add to concerns generated by recent increases in delinquent subprime auto loans, personal loans and credit card debt as lenders target lower-income borrowers to grow revenue in the latter stages of the recovery.

FHA mortgages generally are granted to low- and moderate-income households who can’t afford a typical downpayment of about 20 percent. In exchange for shelling out as little as 3 percent, FHA buyers pay an upfront insurance premium equal to 1.75 percent of the loan and 0.85 percent annually.

FHA loans made up 22 percent of all mortgages for single-family home purchases in fiscal 2016, up from 17.8 percent in fiscal 2014 but below the 34.5 percent peak in 2010, FHA figures show. The share has climbed largely because of a reduction in the insurance premium and home price appreciation that has made larger downpayments less feasible for some, says Matthew Mish, executive director of global credit strategy for UBS. House prices have been increasing about 5 percent a year since 2014.

At the same time, the nation’s biggest banks, burned by the housing crisis and resulting regulatory scrutiny, largely have pulled out of the FHA market as the costs and risks to serve it grew. Non-bank lenders, which face less regulation from government agencies such as the FDIC, have filled the void.

Non-banks, including Quicken Loans and Freedom Mortgage, comprised 93 percent of FHA loan volume last year, up from 40 percent in 2009, according to Inside Mortgage Finance. Meanwhile, the average credit score of an FHA borrower has fallen modestly since 2013. Mish says non-banks generally have looser credit requirements, and lenders have further eased standards – such as the size of a monthly mortgage payment relative to income – as median U.S. wages stagnated even as home values marched higher.

Here’s the worry: If home prices peak and then dip, homeowners who put down just 5 percent and are less creditworthy than their predecessors and will owe more on their mortgages than their homes are worth. That would increase their incentive to default, especially if they have to move for a job or face an extraordinary expense, Khater says. Foreclosures would trigger price declines that ignite more defaults in a downward spiral.

In turn, funding for the non-bank lenders from banks and hedge funds likely would dry up, and FHA loans would be harder to get, dampening housing.

“The non-banks (bring) a welcome change,” he says. They must meet FHA standards, he says, and are overseen by the Consumer Financial Protection Bureau.

Bill Emerson, vice chairman of Quicken Loans, the top non-bank lender, says the credit standards of his firm and his peers are stringent by historical standards and seem looser only because banks tightened requirements after the housing crash.

COSTA MESA, Calif. – Nov. 10, 2016 – Overall satisfaction scores have increased year over year, but a high percentage of homebuyers still have regrets about their mortgage lender, according to the J.D. Power 2016 U.S. Primary Mortgage Origination Satisfaction Study.
The study found that 1 in 4 (21 percent) customers purchasing a home express have regrets about their lender, a claim voiced even more by first-time buyers (27 percent).
Among customers who regret their decision, there are two distinct situations:
Customers who have a poor experience. This group cites an above-average incidence of problems, lack of communication and unmet promises. While this group’s responses aren’t unexpected, they are often vocal about their displeasure, making an average of 9.0 negative comments compared with the study average of 0.7.

Satisfied customers who feel they made a decision too quickly. The second situation is more unexpected, according to survey authors. This group tends to be very price-focused and frequently obtains multiple quotes. However, on some level they feel the process itself was too complex, even though they were happy with the lender they finally chose.

Among customers who regret their lender selection, 72 percent say they were pressured to choose a particular mortgage product. Their final lender choice is often linked to financial reasons, such as getting a lower rate because they have a relationship with the firm (e.g., checking account with direct deposit).
“This ‘happy buyer’s remorse’ is in part due to customers feeling that circumstances out of their control drove them to a particular choice and that options weren’t totally clear,” says Craig Martin, director of the mortgage practice at J.D. Power. “Like a lot of consumers, they are happy with a good deal, but they can feel that they have to jump through hoops to get the deal. In the end, they may not fully understand exactly what they got, and the longer-term risk for lenders is that customers’ perceptions of the deal may change in the future.”
One potential contributing factor to this condition could be TRID (TILA RESPA Integrated Disclosure). Over the past two years, much of lenders’ attention has been focused on complying with and minimizing the negative effects of these new requirements, which became effective in October 2015. Lenders feared that the new requirements would extend an already lengthy process and negatively affect satisfaction.
While various sources have reported increases in the total number of days for the lending process, findings of the 2016 U.S. Primary Mortgage Origination Satisfaction Study show little change in the perceived speed of the process. Improved communication and setting expectations appropriately helped prevent negative perceptions.
“Whether it is a new regulation, shifting rates or new technology, lenders will continue to face challenges that require them to change,” Martin says.
Key findings
A higher percentage of customers this year said their loan representative always called back when promised, compared with last year (85% vs. 81%, respectively), and their loan closed on the desired date (81% vs. 79%)

Satisfaction is significantly higher among customers buying a home (840) than among those refinancing (821). In the 2014 and 2015 studies, the levels of satisfaction in these groups were nearly identical

Technology is becoming increasingly important, with 28% of customers saying they completed their detailed application online, up from 22% in 2015 and 18% in 2014

Top lenders by satisfaction
Quicken Loans ranks highest in primary mortgage origination satisfaction for a seventh consecutive year, with a score of 869. Quicken Loans performs particularly well in the application/approval process, interaction, loan closing, loan offerings and onboarding factors.

CitiMortgage moves up three positions from fifth in 2015 to second this year, with a score of 851. Ditech Financial, new to the study in 2016, ranks third with a score of 849.

Consumer advice
Plan ahead when researching mortgages. Satisfaction among customers who waited until they found a home to look for a mortgage is 92 points lower than among those who started before they began a home search.

Get more than one quote. Among the 32% of customers who received just one quote, overall satisfaction is 19 points lower than those who get multiple quotes. Satisfaction is 38 points lower among first-time buyers only getting one quote vs. those who get multiple quotes.

Choose a lender based on merits, not just price or affiliation. Customers who say they chose their lender primarily because of price/rate or based on a recommendation are significantly less satisfied than those whose choice is based on other reasons.

Mortgage giant Freddie Mac said Thursday the average for a 30-year fixed-rate mortgage increased to 3.57 percent from 3.54 percent last week. Rates remain near historically low levels, however. The benchmark 30-year rate is down from 3.98 percent a year ago. Its all-time low was 3.31 percent in November 2012.
The 15-year fixed-rate mortgage, popular with homeowners who are refinancing, rose to 2.88 percent from 2.84 percent.

The rates reflect the mortgage market in the week prior to Republican nominee Donald Trump’s election as president. On Wednesday, the day the result became known, bond prices fell sharply. That sent yields higher.

Long-term mortgage rates tend to track the yield on the 10-year Treasury note, which jumped to 2.06 percent from 1.80 percent a week earlier – exceeding 2 percent for the first time since January. Traders have been selling bonds more aggressively to hedge against the possibility that interest rates, which have been extremely low for years, could rise steadily under a Trump administration.

The sell-off in bonds continued Thursday morning, with the yield on the 10-year Treasury note rising to 2.12 percent.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year loan also held steady at 0.5 point.

Rates on adjustable five-year mortgages averaged 2.88 percent, up from 2.87 percent last week. The fee remained at 0.4 point.

WASHINGTON – Nov. 10, 2016 – The U.S. Department of Housing and Urban Development (HUD) is charging landlords in South Florida with discrimination against tenants with disabilities. Rather than a tenant-based allegation, the charge reflects concerns about a visitor who travels with an emotional support animal.

HUD charged three entities in the Florida case: the owner of Hillcrest East Building No. 22, a multifamily development in Hollywood, Florida; the property’s management company, Rhodes Management; and a previous president of the homeowners’ association. The housing discrimination allegation claims they failed to make reasonable accommodations, published discriminatory notices and statements, and attempted to intimidate and retaliate against two family members who filed a housing discrimination complaint.

One individual lives at the subject property, and the other person, who has a disability, was allegedly prevented from visiting her cousin at the property because she requires the use of an emotional support animal.

HUD’s charge also alleges that the owners and managers discriminated against persons with disabilities by requiring personal and unnecessary medical information in order to grant reasonable accommodations, and by prohibiting emotional support animals and their owners from having access to the development.

The complete HUD charge is posted online.

The charge will be heard by a United States Administrative Law Judge. If the administrative law judge finds after a hearing that discrimination has occurred, he may award damages to the complainants to compensate them for the discrimination and may assess a civil penalty

The Fair Housing Act makes it unlawful to discriminate based on disability in the sale, rental, and financing of dwellings, and in other housing-related transactions, including refusing to make reasonable accommodations in rules, policies, practices, or services. In addition, Section 504 of the Rehabilitation Act of 1973 prohibits discrimination on the basis of disability by any program or activity receiving federal financial assistance

WASHINGTON – Nov. 11, 2015 – The Federal Housing Finance Agency (FHFA) announced an expansion of the Neighborhood Stabilization Initiative (NSI) to 18 additional metropolitan areas around the country, including four in Florida: South Florida, the Orlando area, the Tampa area and Jacksonville.
Effective Dec. 1, local community organizations in the metro areas will be able to buy foreclosed properties owned by Fannie Mae or Freddie Mac before the general public has a chance.
FHFA, Fannie Mae and Freddie Mac jointly developed NSI through a partnership with Fannie Mae and Freddie Mac and the National Community Stabilization Trust (NCST). The pilot program launched initially in Detroit and was later extended to the Chicago metro area.
“The number of REO properties that Fannie Mae and Freddie Mac hold continues to decline nationwide, but there are still some communities in which the number of REO properties remains elevated,” says FHFA Director Melvin L. Watt. “Our goal is to take what we learned in Detroit and Chicago and apply it to these additional communities as quickly and efficiently as possible.”
Watt says “giving local community buyers an exclusive opportunity to purchase these properties at a discount, taking into account expenses saved through a quicker sale, is an effective way to give control back to local communities and residents who have a vested interest in stabilizing their neighborhoods.”
The 18 metropolitan areas designated for NSI expansion include:
Akron, Ohio